Citi, OPIC and Bank Andara Support the Rapid Growth of the Microfinance Sector in Indonesia with $18.5 Million Term Loan Funding

(OPIC) Citi Indonesia, the Overseas Private Investment Corporation (OPIC) and Bank Andara announced the closing of a USD 18.5 million term loan to fund the growth and strategy of Bank Andara’s Microfinance business, and to promote the financial inclusion of micro entrepreneurs and small businesses in Indonesia. This loan is the second one from Citi and OPIC for the microfinance sector in Indonesia, and is a part of Citi’s and OPIC’s joint global initiative to support microfinance lending in emerging markets worldwide.

OPIC President and CEO Elizabeth Littlefield said, “As a wholesaler to other microfinance institutions, Bank Andara is a force multiplier for low-income households and small entrepreneurs in rural Indonesia. We believe that Bank Andara’s innovative use of technology is a powerful channel to provide financial access to micro entrepreneurs and small business in Indonesia that lack basic financial services. In addition, by supporting microfinance institutions in Indonesia with treasury management services, Bank Andara will help these institutions to better manage their business.

“The successful deployment of capital, banking services and technology will serve to support the development of financial infrastructure of Indonesia, a priority country for OPIC and the Obama Administration. We are extremely pleased to team with Citi and Bank Andara in such a developmentally-rich initiative,” she added.

Ms. Littlefield noted that OPIC provides capital to microfinance institutions through investments in microfinance investment vehicles, targeted credit facilities to individual microfinance institutions, risk sharing arrangements, and guaranties supporting innovative industry efforts. OPIC has committed over $650 million to microfinance projects, which have supported 125 MFIs in 36 countries.

“Indonesia is a developing country that is currently facing a rapid growth in its microfinance sector which has a potential opportunity to grow its economy even further as we know that there are still millions of small business that are lacking of access to banks, financing or microfinance,” says Kunardy Lie, Head of Global Banking Citi Indonesia. “This loan shows the continuation and consistency of our commitment to Indonesia economy. Through Bank Andara, which focuses on rural financial institutions, we are confident that it will come to a progressive development that enables small businesses in Indonesia to grow further,” he added.

David Yong, President Director Bank Andara, added ”This credit facility agreement proves strong support and confidence from OPIC & Citi Indonesia towards Bank Andara’s execution of its mission of Financial Inclusion through a Wholesale FI model exclusively. By positioning itself as champion of micro finance institutions in Indonesia Bank Andara possesses a unique business model, which provides greater reach to technology and knowledge transfer, next to financial services. We are increasingly seeking additional domestic funding channels, including institutions, foundations and high-net worth individuals. Our transactional banking platform, AndaraLink, has shown a healthy growth of new joiners and now exceeds more than 300 micro-finance institutions and growing. By end of June 2012, we have already completed another credit facility from a domestic banking institution and also obtained additional capital from shareholders. The Bank has demonstrated it growth trajectory through total assets which expected to be close to IDR 1 trillion by end of July 2012. Virtually most of the funding will be utilized to increase our lending disbursements to micro finance institutions, in line with our strategic focus. We have the systems and tools in place to differentiate the risk profiles of the various micro-finance institutions and our portfolio is sufficiently granular both in terms of geography and clients. We believe Bank Andara’s unique business & focus will strengthen us as the trusted business partner of Indonesia’s micro finance institutions”.

“While the microfinance sector in Indonesia is one of the largest in the world, the World Bank estimates that only 9 pct of adults in Indonesia accessed a loan from a formal institution last year. Moreover, as less than 50 percent of its population currently does not have access to the financial system, Bank Andara is uniquely focused on providing microfinance institutions and rural banks with access to funding and innovative products technology and training, so that they can serve greater numbers of clients and having grater reach than traditional players. We are pleased to be working with our partners OPIC and Bank Andara to expand financial inclusion in Indonesia,' said Bob Annibale, Citi’s Global Director of Microfinance.”

Citi’s strong commitment to promote financial inclusion through innovation, thought leadership and building clients financial capability is very well recognized. Citi was awarded the top prize in the International Award category at the Business in the Community’s Awards for Excellence 2012 for “Scaling Microfinance to Achieve Financial Inclusion,” a case study of Citi’s $350 million partnership with OPIC to develop new distribution models to access microentrepreneurs in developing markets.

About Citi
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

About Citi Microfinance
Working across Citi’s businesses, product groups and geographies, Citi Microfinance serves more than 100 microfinance institutions (MFIs), networks and investors as clients and partners in over 40 countries with products and services spanning the financial spectrum – from financing, access to capital markets, transaction services and hedging foreign exchange risk, to credit, savings, remittances and insurance products - to expand access to financial services for the underserved. www.citi.com/citi/microfinance